Goldman reaps fee bonanza from record Sinopec deal

A trader works at the Goldman Sachs stall on the floor of the New York Stock Exchange, April 16, 2012.

Reuters/Brendan McDermid

HONG KONG (Reuters) - Goldman Sachs (GS.N) earned the envy of its rivals this week as the investment bank secured a rare monopoly on the fees tied to a record stock offering by Asia's biggest oil refiner.

The $3.1 billion share sale by Sinopec (0386.HK), as China Petroleum & Chemical Corp is known, is the largest-ever equity deal to be handled by a single bank in Asia excluding Japan, according to Thomson Reuters data.

That means Goldman pocketed all underwriting and brokerage fees associated with the deal, at a time when banks are scrambling for roles in the region's equity capital market.

Investment banks knew Sinopec had been planning to raise funds for overseas acquisitions, but it was Goldman that managed to secure the transaction.

According to one person familiar with the matter, the combined sum that Goldman earned from the offering was around $40 million. Such a payout would be much larger than the average fees tied to similar transactions in Asia.

"It's a coup, and because it comes with league table credit, it gives them a major boost because it's on a sole basis," said Philippe Espinasse, a former investment banker with Nomura and UBS in Hong Kong and author of 'IPO: A Global Guide.'

Fees are usually negotiated in private, so it is very difficult to determine the precise sum a bank earns from handling a financial transaction. Fees can run much higher or lower than what's expected.

The around $40 million sum that the source cited would not fall too far from industry norms, based on current fee standards.

Brokerage commissions between buyers and sellers typically range from 0.5 to 1 percent of the total, or roughly $30 million at the low end in this instance.

Goldman was also paid an estimated underwriting fee by the issuer Sinopec of around $9.19 million, according to Thomson Reuters/Freeman Consulting data that estimates fee values.

A spokesman for Goldman declined to comment. A Sinopec spokeswoman did not immediately respond.

Large deals usually involve several international and local banks, with fees spread across all participants.

By comparison, the five bookrunners handling American International Group Inc's (AIG.N) share selldown in AIA Group Ltd (1299.HK) in December received around $16 million maximum per bank, even though that deal was more than double the size of the Sinopec offering, according to Thomson Reuters calculations.